Can IDAs help low income savers sustain homeownership?

Can IDAs help low income savers sustain homeownership?
Lucy M. Delgadillo
Family and Consumer Sciences
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Individual development account (IDA) programs “can be a viable solution to advance homeownership among lower-income groups,” according to research by Lucy Delgadillo in Family and Consumer Sciences. The quasi experiment collected responses from an online survey sent to prospective homebuyers who graduated from an IDA program between 2006 and 2013 in Northern Utah (intervention group) and low-income students from Utah State University who were enrolled in a general education class but never took part in an IDA program (control group). Of the 125 survey respondents, 46 were enrolled in an IDA program that required eligible low-income people to contribute monthly to a matched savings account. Savings were matched at a rate of $3 for every $1 saved with a maximum match of $4,500. Additionally, those in the intervention group completed financial education classes. After 12 to 36 months of saving, participants could withdraw the funds for one of three authorized uses: to purchase a home, pay for education expenses, or capitalize a small business.

Key findings:

  • Over 90 percent of people in the intervention group sustained their mortgage payments for a year without exhibiting any financial problems.
  • Ninety-eight percent of IDA program participants claimed to have enough money to pay for other expenses after making their mortgage payment.
  • People enrolled in the IDA program showed greater confidence and abilities in financial skills than those in the control group.